M3S1 – DUCK beer

Solution

The Preparatory Committee will place the following report on the management table.

In the present circumstances, it is not justified to start series production of the liqueur product. Warehouses need to be filled with raw materials, or new warehouses may need to be built or needed to rent storages for the new production program. Until the production plant is completed the trial production can be started at low capacity, the finished products can be used for market research and promotion purposes, the product can be registered with the consumer protection, the workers of the production line can be trained and other administrative matters can be arranged. With large-scale strategic production, we have to wait for the time being, the ground must be prepared for it. Incidentally, series production is also hampered by the pandemic situation. Due to the closure of restaurants, the absorption power of the market has decreased, and due to epidemiological restrictions, fewer workers can be employed in the plant.

The investigation also revealed that the current production plan is not optimal for maximum revenue. The brewery achieves maximum revenue if it only produces brown beer. It is therefore advisable to switch the light brewery to brown beer in the short term by the end of the year.

The Preparatory Committee undertakes to examine the amount of expenditure that would be possible to procure as many additional raw materials as the market prices required for a production plan with a more even product structure to generate the greatest revenue. They examine how the production program would change if it were optimized not for revenue but for profit. This is because the objective function is not the same for the two problems. On the other hand, lower and upper limits on the quantity of product should be taken into account. However, these constraints need to be developed after a thorough analysis.

The rapporteur emphasizes that the data used in the calculations took into account average risk, as it was considered that the funding background was not yet strong enough to implement an optimistic program. The economic background is uncertain, due to pandemic restrictions and the closure of catering establishments; decrease in product consumption can be forecast in the medium term. However, during the review, the production plant can be completed for the production of the new product, they can train the workers, and they can start the advertising campaign. With the end of the pandemic, they will soon be able to appear in large numbers on the market with malt liqueur, which may surprise the DOVE factory.

Presentation

The written presentation of the Rapporteur:

Economic analysis of new product development.pptx